tv Bloomberg West Bloomberg December 5, 2013 1:00pm-2:01pm EST
>> live from peers three in san francisco, welcome to the early edition of "bloomberg west" and i'm emily chang. let's get straight to the rundown. it is a deal six years in the making and one the one -- and the one that steve jobs couldn't get done, but is apple now working with the largest carrier in the world, china mobile? and scardino joins the twitter
board. has said he will not be leaving. he was a front-runner for the microsoft ceo. what does this mean that -- in the hunt for steve ballmer's replacement? ford's ceo alan mullally will apparently not be the new ceo of microsoft. he is staying through the end of the year with ford. have more on microsoft in a few minutes. but we are also following major news involving apple and china mobile. they have signed a deal to finally bring the iphone to the world's largest mobile carrier with a rollout coming later this month. this comes a day after china mobile will grant a license from the chinese government to operate a new network. jon erlichman is in l.a. following the story. we have been covering the potential for this deal for
years. was this license all they were waiting for? >> there are a host of issues that played into why these two could not get on the same side. them.twork was one of and obviously, the pricing and revenue sharing agreement, subsidies, all of the stuff that apple always has to deal with its working out arrangements with the carriers. at the end of the day, it would be a huge developing for the company just based on numbers. we are talkingbout a carrier that has well over 750 million subscribers. you put at&t and verizon together and they still look small compared to china mobile. about 175 million or more of those were already using the devices that apple uses. thate kinds of devices apple uses. about 17 million iphones alone coming from china mobile in 2014. that would be more than 10% of the total number of phones they sold this year. those financials tell you it is a big deal.
>> does this take any short-term pressure off of apple to unveil new products, like a watch, like a television? >> going back to financials it will. fore it has taken so long apple to get to this place, all of the analysts have been skeptical about the possibility of moving into china mobile and how much money apple would make. aware that people are hungry to know when apple's next big innovation is going to be. we sit here talking about big innovations from other companies all the time. the amazon drum is the biggest example of that. if you don't know what is coming next from apple, it's tough to know where some of the cash is being used. ad let's not forget there was very influential investor, carl icahn, saying, happel -- apple, i love you, but why don't you put some of the money back to work for stocks?
>> thank you. ford introduced a brand-new mustang today in what many consider the culmination of the one ford plan. it is the centerpiece of the carmakers turnaround. name mentioned as a possible replacement for the outgoing ceo of microsoft, steve ballmer. many are speculating this could be the culmination of his time at ford, but that is not necessarily so, said mullally himself. bloomberg sat down with him earlier today to talk about his plans. >> you have always told me in the past, i'm going to stay in -- until at least 2014 to reach to the end. >> there is no change in that. me is matt miller and cory johnson. i posted your interview with mullally on twitter and a lot of
people are saying to my can't tell if that is a no or a not yet. what do you think? it is noncommittal, and really a nonanswer, especially compared to what i've gotten from him in the past. this speculation has been out there for months and months. and usually, every time the story breaks again, i will e- mail alan and he is the kind of ceo that gets right back to you. he has always said, i plan on serving ford as the ceo and president until at least the end of 2014. a pretty solide answer. he's not reiterating it that way anymore. now he just says "no comment," or "i'm still continuing to serve ford e there is no solid answer that he will be there until the end of -- to serve ford." solid answer that he will be there until the end of 2014. >> are the board members saying the same thing that he is? x i was talking to one of our
reporters in detroit who was at an event this morning. that this isg mark the plan, that alan is going to stay until the end of 2014, but the board has not really prepped him on this. the board has not gotten him in the room, shined a light in his face, and said, how long are you going to say -- stay? the ford family are the ones that run and own the company. those kinds of decisions if they want, but they have not grilled him on it. >> air is a lot of room for interpretation. cory johnson, how would you interpret all of this? i have interviewed him a couple of times as well and he is a straight shooter. it is clear he is dancing around this. i thought it was interesting that a longtime goldman sachs who has covered microsoft as long as anyone and
is as close to microsoft as ,nyone, i always listen to him about what he says about microsoft. and he says it is a strong likelihood that alan mullally will be the guy who takes over this company. in tech might think it is really weird to have a guy whose experience was largely at boeing, for a while at ford, and no hands-on technology experience. technology is something that impacts all kinds of companies all over the world. iker soft is selling to all of those companies. -- microsoft is selling to all of those companies. they really are at a crossroads. are they going to focus on fixing microsoft, or focus on the future of technology? whonderstand the guy understands the microsoft cloud business is the guy who is the other internal candidate. and that is a very forward- looking -- eli?at about >> from what i understand, he is not in the final picking.
that -- just say >> the speculation will obviously continue to swirl. >> i also want to point out, as you both surely know, steve ballmer has said in the past, alan mullally would be a great leader for any company. the guy is an engineer. a lot of what needs to go on at microsoft is engineering. he's a leader., i would be a little bit guilty of subject adoration, but so is everyone around this guy. i watched the people who work for him. they love him. he walked out on the street today after the good morning america said and people were asking him to sign their body parts with a magic marker. he's like a rockstar ceo. >> i don't really want to know which body parts. >> [laughter] >> i think he is one of the most impressive ceo's i've ever met. have what it takes to turn microsoft around? >> if anyone does, he does.
look at all of the things he's done at ford in the time he's been there. raising capital before the crash of 2008. he did what other automakers have not been able to do without tarp funding. he is an impressive guy. you can see why microsoft would at least even a serious look. -- give him a serious look. >> we will see if the board shines a light in his face and asked him what is really going on here. >> no waterboarding. >> [laughter] thank you. just a reminder, we will bring bring you -- just a reminder, we will be bringing you a special " bloomberg west" tomorrow. we will show you how ebay is andnding into storefronts take you behind the scenes of the ticket site stub hub. with ae you on a run
>> this is "bloomberg west" on bloomberg television. i'm emily chang. twitter has named former pearson ceo marjorie scardino to its board. she led the publishing company for 15 years and her addition comes after twitter faced months of criticism for not having a woman on its board. jon erlichman is tracking the story and joins us from l.a. what can you tell us about the hiring process? i know when i -- vico pick costello costello on hiring dave that they were looking for a woman for the board.
it now becomes this question, why this pic? there are a few reasons. obviously, having her deep media background is incredibly helpful. but there are other factors, being a good person, a smart person, and additionally, having a lot of internationally -- international experience. this twitter business grows, as a media company, what are some of the pitfalls, things to avoid as you are growing? what about the relationship that she has developed over the years with different advertisers that could be important to twitter? to emily aboutlk this search for a female director. here's what he had to say. >> it was very important to us in the run-up to the ipo not to ask someone to join the board and sign off on the kinds of registration statements and personal liability you have to take on before they have spent any time with the company or
even come to a board meeting. we did not think that was respectful. we will have women board members. it is something we are actively having discussions about and we regularly talked to candidates about. >> he has put the money where his mouth is. news, twitter just announced some changes to their advertising business today. what can you tell us? >> speaking of money, this is something that might not interest everyone today, but if it shows up in twitter's financials it certainly will. it is almost like they're taking a page at a facebook's playbook. they're working with certain ad partners. if you were to go to a travel site and that trouble site was interested in targeting you as an add-on twitter when you go back to twitter, they are able to do this by implementing some of this technology. it is the kind of technology that has helped boost the financials of facebook. twitter is hoping for something similar.
>> chinese financial organizations may have to say goodbye to bitcoin. the country's central bank is barring financial companies from using the currency. staying bitcoin does not have real meaning and does not have as regulargal status currency. the public will be able to exchange bitcoin among themselves. the move comes after the digital currency's value has soared after demand from chinese investors. our guest, his firm is looking to expand business in china and you live in china as well. why has the chinese government on this? economyntire chinese and the banking system is concerned about alternative centers of power emerging, in whatever area that might be. is now --encies digital currencies is now one of those potential threats. bitcoin has found tremendous --chase -- no pun intended
in china. it helps people get around some of these rules. >> a lot of chinese people do use bitcoin. >> it is still early, but china is a tech savvy place. thele like the appeal of homemade kind of things. the idea of this homemade money really resonates in china. but it is dangerous if the government does not control it to some degree from spilling over into the real economy. >> what are the popular things purchased using bitcoin? >> people are using it for anything and everything. even house purchases, i've heard. chinese maintain strict technical control. you can only bring in $50,000 a year and take out $50,000 a year. house prices, you would not get much for $50,000. people are finding ways to circumvent these capital controls. i think bitcoin has found tremendous and peel -- appeal
among money -- money laundering and criminal elements as well. they enforce this? >> the way china has to move is reform. there's a lot of talk of pushing reform. we have foreign central banks increasingly holding reserve. if they do not liberalize fast enough, then you will see, whether bitcoin or other types ,f currencies or instruments emerging. the party wants to send a warning to stay related banks and companies not to use this currency. >> we talked about the new administration in china. do you see them moving in a more conservative direction? >> socially and politically, almost no advances. steps.en retrograde >> facebook and twitter still block five years later and no indication that will change. >> rightful top but on the economy, the general sense is
that if china doesn't have any reform, the brittle rules will threaten power. theerms of the market being fundamental decision maker, if you will, in terms of prices, they say they will not give up on enterprises yet. and some people say that china is a largely enterprise own state. increasingly, consumers in the middle class are getting the upper hand. the government recognizes that and is slowly trying to shift the emphasis to the consumer economy. but they have not broken up enterprise. does the 4g license that the government has now given china mobile, which enables them to potentially sign a deal with apple finally, how does that play into this? mobile ist that china first out of the gate with 4g is very helpful to them.
china mobile has suffered from a skewed policy of industrial, home country champion with the chinese three g standard. into a as they move standard that is akin to global 4g, we see the iphone regaining momentum and the ability to soak up the strong demand for smart phones. >> you are saying the government held china mobile back. >> china mobile was held back because the chinese government anointed this dubious -- anointed it to this dubious prize of three g. chinese consumers are increasingly in the driving seat. the government is beginning to recognize that. it is not happening overnight, but incrementally you can see the government bowing to the fact that consumers will make their own choices. we will keep watching. it is great to have you here when you are in town. still ahead, why the president of the rhode island school of
become a design partner at kleiner perkins. he will start his new role in january. he is expected to work with portfolio companies to help them build design into their company culture. as the also be at ebay newly created design chair. my partner cory johnson spoke to him and asked about the intersection of tech and design. take a listen. when i think of technology and design i think of apple. technology used to be a factor, now we don't care anymore. we don't care if it is faster anymore. the care of it is better now. it hasmatters more than in the past two decades. >> that was the school of design
president, soon to be the design partner at kleiner perkins. we'll be live at ebay headquarters all day tomorrow for a special bloomberg west. we'll have an interview with the and much more.oe you do not want to miss our ebay special tomorrow on bloomberg -- "bloomberg west." markets onok at the the move every hour. here's julie hyman. we do have a bit of a mixed picture today as people trying people are the -- trying to weigh the economic data that came out this morning. the nasdaq flirted with the green a little bit, but is back down 1/10 of one percent. we want to highlight a couple of stocks. a technologyis stock. the company reported strong data through phase three of its breast cancer drug.
>> this is the early edition of "bloomberg west" and i'm emily chang. we have top headlines. vice president joe biden has arrived in south korea for the final stop on his three-country asian tour. he will meet with south korea's president to talk about north korea, and then deliver a speech about the u.s.-korea relationship. give its crew a training program following the sinking of the costa concordia last year. it is building a training facility in the netherlands which will feature new simulators. it is spending $7 million to improve fire prevention tools on
the ships. dangerous traveling conditions in the south and midwest, parts of texas and oklahoma and nearby states racing for ice storms with freezing rain forecast to fall in the areas tonight. the meantime, the northern plains are getting battered with heavy snow. 72% of america's public schools lack the broadband they need for digital learning. that is according to studies done by the nonprofit education superhighway, whose mission it is to bring high-speed broadband internet access to every public school in america. milliont announced a $9 round of funding led by mark zuckerberg's started foundation and the gates foundation. we are joined by the ceo of melt and the founder of foot video. he joins us from new york. you guys are saying you this will be a comprehensive effort to bring internet into the classroom.
how comprehensive do you hope this will be a complex the sec developed -- hope this will be? fcche afc east -- the developed a program to bring high-speed bandwidth into every classroom in america. is, it is a 17-year- old program. it's like a dirt road. we really need a highway. we need a way to get high-speed bandwidth into every school, so that schools have access to the technology they need to be able to teach our kids. this is happening all over the world and is not happening in america. we need to make a big change. >> what sort of challenges do you run into getting internet into the classes e is it all about money? ?> -- into the classes is it all about money? >> the first is understanding which classrooms have the technology and which do not. we created something called the schools speed test, which tells us which ones have high-speed
bandwidth and which ones do not. and we are helping with policy reform. we are helping policies -- classrooms be able to purchase this bandwidth. $20 classrooms are paying per megabit and other classrooms are paying two dollars per megabit. the reason is because the technology is not up to date in every classroom will stop it is figuring out ways to help the schools, and not only the schools, but also our government. andigure out what to change how to make the changes in the classrooms. >> what it comes to education, there is a lot of argument about priorities. some people say we should place priorities in getting more teachers into school, getting better supplies. i did not have the internet in my classroom growing up. how do you address the so-called prioritization issue? iswhat is great is the money already there. the fcc already has the program and the dollars are already there. they just need help from an
organization like the education superhighway to know what kind of reforms need to be done to make this money spent better. you used to pay a certain amount for your phone bill, and when the phone system got better technology, you paid a lot less. over time, we need to figure out a way to get knology into the classroom so that students, teachers, administrators all have the opportunities to use what we use everyday in our homes. it is a little sad that the internet i have in my home is better than the internet in most of the entire school system in america. what role are mark zuckerberg and bill gates playing in this? >> they are helping to fund the nonprofit. we are excited about that. both the gates foundation and mark zuckerberg have given along with many others to make this reform happen. partnering with technology companies as well. what can you tell us about the partnerships you've made so far so far -- so far?
want to doeally this. they want to bring the american education system standards up. they want to help our children. they want to bring high-speed into the classrooms. ande are many companies even nonprofits trying to do similar things. we are just taking the lead in helping to make this a reality in the next three-5-10 years. to five to 10 years. >> are you saying that every school will be wired the way it needs to be? >> that is our hope. >> jonathan kaplan, education superhighway chairman. inc. you for joining us. -- thanke right back you for joining us. we will be right back after this quick break. ♪
he agreed to produce some of hollywood's biggest movies, including star trek, pretty woman, and shrek. where does jeffrey katzenberg see opportunity for future films? china. event anmberg interview last night, he explained a very unique market. >> five years from now, china will be the number one movie market in the world. in americabillion today. they are 3.5 billion dollars this year and in just a few years will surpass us. they will surpass us sheerly on the numbers. >> as discussed earlier, hollywood is not the only area expecting growth from china. won today, china mobile state approval -- china mobile w approval to bring in the iphone. this will give access to apple to 1.3 billion subscribers.
i should say there are 1.3 billion people in china. china mobile has 760 million or so subscribers. the potential is huge. >> it is a huge potential. and verizonat at&t combined, and that is about 10% of apple's business, they are 200 30 million subscribers. as you say, 760 million versus 230 million, obviously there are spendetween what they can in china versus the u.s., but it frames the opportunity. tell us about the numbers. >> we have gone back and look at the street estimates. it appears that most analysts do not have the iphone in their estimates. that will add about 17 million units, we think, in 2014. that would increase the street revenue by about five percent. millionon out of 760
subscribers should be a pretty easy hurdle to hit. >> just yesterday, you did not think this would happen until about march. why did it happen so fast? assuming this has happened. this is coming from the "wall street journal." >> it has not been confirmed. it sounds like it will be more like december 18. we are still not clear when they will sell the phone. -- chinaannounce mobile has a 4g announcement. this is their new net worth that you were talking about yesterday. -- network that you were talking about yesterday. andher they sell them december or january, the march quarter is the first full quarter this will matter. >> describe the demographics of china mobile's user. obviously, other carriers there have had the iphone for a long time. could people who wanted the iphone have already gone over to those other carriers? >> yes, and they probably have lost some will stop -- lost some.
we have gone back and looked at the numbers and it is about eight percent. that compares to about 65% in the u.s. if you think about the demographics, china mobile has probably lost some people. jumping fromw that one carrier to the other. >> you have been the guy saying that an apple tv is coming at some point. does this take the pressure off apple in a way, now that they have this whole new market of potential customers? does this take the pressure off of apple to release innovative products like the tv or a watch? >> this will satisfy investors for maybe a couple of weeks. then they will be back to wondering what those new categories that the ceo tim cook has talked about. we think that 2014 should be the year of new products. >> and when apple releases, it will release at the same time in china. do we think that is their strategy going forward?
they will give the chinese market equal precedent that the u.s. gets, and the rest of the world? >> one of the big challenges has been in production. it will be a slightly bigger stream -- screen. the next version of the iphone. it's hard to say that china will get it at the same time. supply is tied to some of their older countries. >> you think the next one will have a bigger screen. >> they have hinted to as much. as far as the timing, they will stick to this one year cycle. a lot of people think it will be a nine month cycle, which would put it around june. our belief is that it will be more like early fall. >> what does this mean for the competition? now that apple has access to hundreds of millions of subscribers that they already had access to? >> probably the biggest negative
is for samsung. ultimately, they will lose. the pricing on china mobile's prices is $240 u.s. dollars. those most expensive phone numbers are probably -- those most expensive phones are probably the most impacted. >> la lakers star kobe bryant might be sidelined with an injury, but it won't stop him new high-tech a pair of sneakers. we have a peek at his new kicks. ♪
about the technology involved in the new kicks. >> it is phenomenal what you can do now with technology. the biggest challenge for us was with the running shoe. now it is how you integrate that into a basketball shoe when you are moving in a. of ways, not just straight forward it is more dynamic movement. myriad of ways, not just straightforward. it is more dynamic. you want it stable and can handle the size of nba players. hightop hitsine stores in february. you can see jon erlichman's full interview tomorrow. one of the big lessons learned from cyber monday is that websites have gotten a lot better at closing deals. ibm said that four percent of the shoppers it tracked bought
something after they visited a site. a 13% increase over last year. cory johnson has more. >> one big reason for the online deals is a visual source, images that come up in their search results that lead to more sales. we are joined by a venture capitalist who focuses on e- commerce investments. i love the idea of search innovation. ire member when they were talking about this new company wegle -- i remember when were talking about this new company google. thatdo you see in the way visual search can manifest itself? >> if you think about the content types that increase fastest over the internet. think about the sharing, social networking come a what do we do? we post pictures. visual media. try to copy one of these images from instagram or what have you and stick it on a cool search bar. -- google search bar.
lexus is an example of a purse that you want to find somewhere. example of a an purse you want to find somewhere. >> exactly. it is something you like the shape of. how do you describe this? or my watch, how do you describe that without knowing the brand? come up visually, do we have to describe it in words instead of just clicking on a visual match? >> amazon has a program called mechanical turk. case study for this is there are lots of people who want to get paid pennies or micro-pennies to do something. they will show them images and asked them to type in what the images are. >> they do not have people looking at every website at google. you need to have algorithmic approaches of scale.
analyzing visual images is one of the hardest things you have ever tried to do at scale. there are come to need out there, superficial being one -- sh beingal --superfi one, that are tackling this. hundredsithm looks at of millions of and ridges -- of images per day. they can quickly index it against literally hundreds of millions of product images and show you the one that looks like that image. >> i'm amazed at apple's ability with iphoto to tag the names of people in my family when i go through personal pictures. is the technology the same? >> in some ways. when you are looking for a face, you are giving it a lot of hints. if you are looking for a genetic product image, it is much harder. you do not know what you are looking for when you are first given an image. >> why hasn't google done this already?
>> let's say there are a lot of people trying, but it is hard technology to solve. we are venture capitalists. we think they'd. they.think google was a small thing and they made it big. calledthis investment is --? >> super fish. -- >> do you think it will have more commerce, or more commerce related results? >> it is a start. if you click on something and buy something, people get paid. super fish has been profitable for a couple of years. lex already? >> yes, year-over-year. >> thank you very much. wild stuff. >> wild, indeed. we will have more on "bloomberg west" just after the break. ♪
>> welcome back. i'm emily chang. amazon ceo jeff bezos is also in the private space race. his company, blue origin, has ast testified -- testfired new rocket engine. what does this mean for other suppliers like spacex? -- 6at 6 p.m. the specific p.m. pacific. matt miller is in new york. marketse looking at down across the board on tape or talk. the s&p is down about one third of one percent right now.
we see the dow jones industrial average about 60 points down. a big day for one stock, and that is, ford. the big company is unveiling its brand-new mustang, one of the really true iconic cars alongside porsche's 9/11, and the beetle. this is kind of the culmination of the one for strategy. this car has been around 50 years around the globe. the world hast wanted for many, many years. and now with our one ford, we can deliver this mustang around the world. >> selling the same products to all the markets around the world has been the centerpiece of alan mulally's turnaround strategy at fort. ford. the things he -- at one of the things he has done is this a technology. he has boosted performance as far as horsepower and fuel efficiency.
something that many mustang fans of the past would consider sacrilegious in giving the car independent rear suspension. to his explanation. >> not only do we have independent rear suspension, but also new front end suspension. you can select the ride and performance that you want to have and you can change that to me your desire for that day. >> speaking of ride and performance, ferrari is revamping its car as well. it is a family van with lots of space. v 12.monstrous six liter i got to take one for a spin. >> this is the biggest engine for ari makes. it puts out over 650 horsepower and is the only four-wheel-drive
car that for ari makes. build its brand around the speed and excitement of its two cylinder, but now is trying to market to a -- an audience rarely, if ever, associated with the track, the family man. >> a versatile car, but at the same time, a leader. >> it is my favorite, and i will show you why. the seatbelt. it is delivered to me. .he sound the steering wheel is purposely built for driving. your turn signals here and your horn as well. you can flasher lights here. the transmission, tool shift paddle shifter. formula one technology directly from the racetrack.
lex -- >> we perform -- we combined performance and functionality. >> the obvious difference between this and any other ferrari is the space. it is a four seater. two adultsk -- fit in the back. you can put luggage in here. usually, it is a two seater. you cannot bring children or friends. now with a fourth seed, you can give the joy and failing to other members. are back with more on the markets in 30 minutes time. money moves is up next. >> welcome